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Terry Slavin interviews the CEO of TerraCycle, the New Jersey start-up that has partnered with brands including P&G, Unilever and Nestle and retailers Carrefour and Tesco in the new Loop platform, a breathtakingly ambitious attempt to move from disposable to durable packaging
Most CEOs measure success by whether their companies managed to hit their annual growth targets. Tom Szaky has loftier metrics.
“In the end we will measure our success in what percentage of the world has moved from disposables to durables,” says the boss of Trenton, New Jersey recycling firm TerraCycle.
One might have wondered if Szaky had quite returned to earth after quaffing champagne with the global business elite at the World Economic Forum in Davos in January, where he launched Loop.
But it quickly became clear during our phone interview that the 37-year-old Canadian’s connections in high places have far more solid foundations, having been built over 16 years of work in 21 different countries helping the world’s biggest consumer goods companies, including Procter & Gamble, Mars Inc, Nestlé and Unilever, to reduce their waste.
The Loop system will allow global brands to sell thousands of products but retrieve their packaging, so it can be reused
Szaky says TerraCycle, which also works with cities on programmes such as cigarette butt recycling, and with the manufacturing industry, started out providing solutions for difficult to recycle products – “from diapers to chip bags, and everything in between”.
It then expanded into the re-use market. Szaky worked with P&G, for example, on integrating ocean plastics into bottles of Fairy Liquid and Head & Shoulders.
But two years ago TerraCycle realised that neither of these approaches, though critically important, was tackling the root cause of waste and turning off the tap.
Now it has partnered with those global household names, and key retail giants like France’s Carrefour and Tesco in the UK, to hatch a breathtakingly ambitious plan to throw the entire linear business model of take, make and discard, quite literally, for a loop.
In essence, the Loop system will allow global brands to sell thousands of products but retrieve their packaging, designed so they can be reused for 100 times or more, or easily recycle them. Consumers are incentivised to return the packaging because they pay a deposit.
The 300 products in the trial phase will cover everything from razors to tampons, washing up liquid to electric toothbrushes, cat food to orange juice – indeed a wide enough range of products to allow consumers to live their entire lives in the Loop, Szaky says. “We are trying to make it so it’s the brands you already love in the retailers where you already shop.”
The average consumer cares most about convenience and affordability. We need to accept that and offer models to play into that
And it is aimed far beyond those eco-worriers who would pay a premium for plant-based laundry detergent, and diligently bring their rinsed-out cola bottles to refill stations. Loop products will be priced at no extra premium to conventionally packaged alternatives, and require no extra work from consumers, Szaky insists.
“The average consumer cares most about convenience and affordability,” he says. “We need to accept that and offer models to play into that. At Loop we try to emulate the throwaway experience. The only difference is you throw it into a reuse bin, and not a rubbish or garbage bin.”
Loop will launch on the Isle de Paris and New York state in May, and in the UK by the end of this year, before launching with as yet unnamed retailers in Toronto, California and Tokyo in 2020. Since Davos, however, retailer interest in participating has flooded in from all over the globe.
Szaky counts off Mexico, South Korea, and Germany among the 20 to 30 countries where there have been discussions or confirmation.
Asked about Loop’s potential impact, Szaky is surprisingly reluctant to offer even a ballpark figure. He points out that all the big global brands have now signed up to offer a cross-section of their product lines in the Loop, but there is little doubt that the Loop is a high stakes gamble, promising a revolution in how consumers shop and imposing a form of extended producer responsibility for packaging.
This is a foundational breakthrough in sustainability. Waste has become a very big deal for brands'
So what’s in it for the consumer goods companies? Szaky says because the brands retain ownership of the packaging, they treat it as an asset rather than a cost, something that has unleashed “unparalleled innovation in packaging”.
The other attraction is reputational. “This is a foundational breakthrough in sustainability,” Sznaky says. “Especially in the world of waste, that has become a very big deal for a lot of these brands.”
Nestlé said the partnership would help to achieve its commitment, made in January, to make 100% of its packaging recyclable or reusable by 2025. Not only are Häagen-Daz’s sleek double-walled stainless steel ice cream tubs more durable, they are also more attractive on the shelf, and will “elevate the consumer experience” by keeping ice cream at optimal condition during transport and consumption, the company said.
Unilever, another Loop launch partner, is putting nine of its brands into the platform, including Rexona, Dove and Axe deodorants; Signal toothpaste; and Hellmann's mayonnaise.
This has unleashed innovation in content as well as packaging. With Signal, Unilever has developed an alternative to toothpaste, a small tablet of tooth powder that consumers chew, then brush as usual, without needing to rinse with water.
These brands have different users with different requirements, testing through all of them will bring a wealth of learnings
Virginie Helias, who heads up sustainability at P&G, said in an email that the consumer goods company’s partnership with Loop would help it deliver on its Ambition 2030 plan, announced last year, to make packaging for its biggest selling brands 100% recyclable or reusable by 2030.
P&G was the first company to support Loop, and has taken a 2% stake in the venture. It has entered 11 products, among them Pantene, Cascade, Tide, Crest, which have designed brand-new durable and either refillable or reusable packaging.
Pampers will test consumers' willingness to recycle diapers, which consumers will simply remove from their babies and put into smell-proof caddies, while Gillette and Oral-B are offering products with durable handles and parts that can be detached and recycled. “All these brands have different users with different requirements, habits and expectations, and testing through all of them will bring a wealth of learnings on the new model.”
She said P&G would monitor the first trials in New York and Paris to gauge the prospects of this radical new business model succeeding. Most importantly, will consumers buy it? “Loop requires a major habit shift from the single-use pack experience,” Helias said. “After the initial induction period we need to see if consumers will adopt this new solution as their new regular shopping pattern at the pace and scale required for a meaningful expansion.”
Also critical will be the bricks and mortar retailers, who are at the epicentre of Loop in each geography. Carrefour plays this role in France, while in the UK it is Tesco. TerraCycle hasn’t named a retail partner yet for the US and Canada.
The reputational kudos of tackling packaging waste and emissions from deliveries is what makes it appealing to retailers
While the Loop starts off as a standalone system, with logistics companies like UPS delivering the products and picking up empty packaging from consumers, it soon moves to being integrated into the e-commerce offerings of retailers, who will sell them alongside conventional products.
Whereas today supermarket delivery trucks return to the depot empty, the same delivery trucks will also be picking up Loop empties, cutting the carbon footprint on online deliveries. Eventually they will also offer Loop products in store on their physical shelves.
Szaky says the reputational kudos of tackling packaging waste and emissions from deliveries is what makes it appealing to retailers, despite the investment they will have to make in their online systems to manage the deposit return model on which it is based.
The other major player, of course, is TerraCycle itself, responsible for collecting, sorting and recycling the waste streams, and generally keeping the show on the road.
Where will this start-up get the substantial finance to grow from its New Jersey base to establish factories around the world?
Szaky says Loop is raising capital from venture capitalists, and some of its consumer goods and services partners have invested in Loop, including waste company Suez, which has taken a 4% stake. A new facility outside Paris opens in May, with another near London due to open later this year, and a third being built in north-east New Jersey in preparation for the US launch in May.
It’s not just about launching, but becoming thick and meaningful on the ground
He said the intention is not to expand too fast. “It’s not just about launching, but becoming thick and meaningful on the ground,” he says.
To make really substantive inroads on turning off the tap on packaging waste, Szaky realises that Loop is going to have to launch in countries like Thailand, Cambodia and Indonesia, and eastern Europe, where affordability issues may make consumers resistant to a returnable deposit system.
It’s something TerraCycle is working with policy experts at the World Economic Forum to crack. “I can’t say we have the answer yet, but some amazing minds are thinking about this, because it’s absolutely critical.”
Tom Szaky will be one of more than 100 speakers at Ethical Corporation’s Responsible Business Summit New York 18-19 March.
TerraCycle Loop Unilever P&G tesco Carrefour reusable packaging